Announced today at Cardano Summit 2021 in Wyoming, Charles Hoskinson and Shahaf Bar-Geffen said the COTI platform would be the official issuer of Djed, a new stablecoin for Cardano. The company was the first recipient of equity investment from the cFund for Cardano developments.
According to the Djed website, Djed is a stablecoin that “acts as an autonomous bank.” A research document on Djed is available here.
According to a statement distributed by IOHK, Djed is based on an algorithmic design that uses smart contracts to ensure price stability. Smart contract programming is also used to ensure that the stablecoin will work effectively for decentralized finance (DeFi) transactions.
Djed is said to operate by maintaining a reserve of base coins while minting and burning various other stable assets and reserve coins. It is designed to be used for paying transaction fees on the Cardano network. An objective is that Djed will make transaction costs predictable avoiding high gas fees.
The development team is of the opinion that stablecoins are a ‘killer app’ that will be adopted by a large number of crypto users for settling payments and covering fees.
Charles Hoskinson, IO Global CEC, said:
“The Djed stablecoin could be a game-changer in the crypto space, appealing to an entirely new audience at a time when the industry is already experiencing astronomical growth. Djed shares our commitment to formal verification, proving a robust method of combating price volatility of crypto markets. COTI has been a long-time partner of the Cardano ecosystem. It’s great to have them on board with this new venture.”
Shahaf Bar-Geffen, CEO of COTI Group, said the stablecoin ecosystem has matured tremendously over the past few years.
“Blockchain participants are using stablecoins to engage in everyday transactions because they allow monetary value to be exchanged in a seamless manner, regardless of the sender and recipient’s location. I believe that adding the Djed stablecoin to the Cardano blockchain will significantly improve how transactions are settled on the platform.”
The announcement arrives at a time when the regulatory rhetoric regarding digital assets, including stablecoins is increasing. Meanwhile, some industry advocates believe stablecoins are simply a method to remove intrinsic friction in legacy payment rails.